The Firm Will Make the Most Profits If It Produces

question 158

Multiple Choice

The firm will make the most profits if it produces the quantity of output at which

• A)marginal cost equals average cost.
• B)profit per unit is greatest.
• C)marginal revenue equals total revenue.
• D)marginal revenue equals marginal cost.

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Definitions:

Straight-Line Method

A method of calculating depreciation or amortization by evenly spreading the cost over the useful life of the asset.

Gross Profit Rate

A financial metric that represents the percentage of revenue that exceeds the cost of goods sold.

Perpetual Inventory Method

A system of inventory management where updates are made continuously to account for additions to and subtractions from inventory, showing real-time inventory levels.

Partial Equity Method

An accounting method used when an investing entity holds a significant but not controlling interest in another entity, recording the investment at cost and recognizing a proportionate share of the investee's earnings.